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Lloyd Mexico Economic Report - October 1999

CONTENTS:


State of the Nation: -

On September 1, President Ernesto Zedillo Ponce de León delivered his fifth "State of the Nation" address. With federal elections coming next year, his address highlighted the progress Mexico has made since 1994 and the challenges ahead. Here, in the form of quotes, with emphasis on economic matters, is a summary of what he said:

CHALLENGE OF POPULATION GROWTH

"We have been aware... of the great challenges posed by the growth of the population. In the last 30 years alone, our population has doubled. In 1970 there were 48 million of us; in the year 2000 there will be 100 million. In addition, there are more than 10 million Mexicans living in scattered settlements of fewer than 500 people each... It has been particularly difficult to provide those Mexicans with basic services..."

PUBLIC SPENDING

"This administration allocates most of its human and economic resources to the basic services and supports that the people need most. The vast majority of State workers are teachers, doctors, and nurses. ... this administration has increased its public spending for people each year. Today we are devoting 60% of the programmable budget to social spending,... the highest proportion in Mexico's history. Ten years ago, the figure stood at 36%, and 15 years ago it was 28%."

DECENTRALIZATION

"This administration has effectively decentralized functions in a wide variety of fields... We have taken firm steps to see to it that the local areas where problems originate have more decision-making capacity to solve them. They now also have more resources... Powers, duties, authority and resources that were previously in the hands of the federal government have been transferred to the states and municipalities. At the beginning of this six-year administration, the state and municipal governments spent 78 centavos for every peso spent by the federal public administration. Today, thanks to this transfer of resources, the states and municipalities spend nearly 1.5 pesos for every peso spent by the federal government."

EDUCATION

"In 1970, when average schooling in Mexico stood at 3.4 years, the goal was completion of primary education. With today's average of 7.7 years of school, the goal of nine years is already inadequate... Twenty-five centavos from each peso of planned government spending go to education... This has made it possible today for one out of every three Mexicans to be attending school... More than 5.26 million youngsters are enrolled in secondary education, 770,000 more than in 1994... More than 2.86 million Mexicans are enrolled in high school, half a million more than in 1994. Five years ago, there were 120 technological institutes in the country; there are now 161. Five years ago, there were seven technological universities; today there are 38. As a result of these efforts, 2 million students are now enrolled in higher education, 520,000 more than in 1994."

"We have completely revamped the secondary school curriculum. For the first time ever, with the assistance of the states, free textbooks for secondary education are being distributed... The government is working toward a comprehensive reform of teacher training..."

HEALTH AND SOCIAL SECURITY

"During the past five years this administration has built 156 new hospitals - one every 12 days - and 2,800 health-care centers and clinics... 98% of children under five years of age are now being vaccinated against 12 diseases."

"The Mexican Social Security Institute holds the common assets that protect the health and retirement pensions of half the Mexican people... This administration proposed a far-reaching reform in social security, which was approved by the Mexican Congress... The federal government absorbed the enormous liability of paying pensions and increased its regular contribution in order to reduce the amounts paid in by workers... A new, fairer and more productive savings and retirement system now protects 14.8 million workers."

HOUSING, WATER AND ELECTRICITY

"In the past five years, an additional 8.3 million Mexicans have been provided with drinking water services and 10.5 million with drainage and sewer systems. Electric power now reaches 95% of Mexico's homes. Half a million families in low-income neighborhoods have received regularized deeds to their lots, and 2.1 million have obtained financing to purchase or improve a house or apartment. Last November, INFONAVIT made a commitment to finance the construction of 200,000 housing units in 18 months, the most ambitious objective the institute has ever set."

PROGRESS IN AGRICULTURE

"This administration has been carrying out a comprehensive strategy to correct structural limitations in the rural sector... Twenty thousand ejidos and communities - nearly 70% of those existing in the country - now have deeds and certificates that recognize and define their property and their rights... Each year, PROCAMPO (Program for Direct Support for Mexican Producers) delivers cash payments to guarantee a minimum income for 2.9 million farmers who sow 14 million hectares of basic crops. With this support, the campesinos acquire inputs and protect themselves against price fluctuations."

"During this administration, agriculture has gradually been resuming dynamic growth, which in spite of extreme weather conditions, has on average already surpassed population growth. Furthermore, progress in agricultural exports reflects the transformation in production that investment brings about."

FIGHT AGAINST RURAL POVERTY

"Rural poverty forms a complex and resistant vicious circle...
Poor people in rural areas demand opportunities to achieve progress through their own efforts. That is why the expansion in education and health-care coverage focuses on disadvantaged rural areas. That is why PROGRESA now reaches four of every five rural families affected by poverty, and why unsecured loans are granted to almost 550,000 subsistence farmers... Furthermore, we are providing seasonal jobs to build and maintain roads and to construct projects for the common good that will increase returns from production. This year, seasonal employment programs offer one million jobs... These programs have a dual impact on families and communities by both providing salaries and adding new and improved infrastructure."

SUPPORT FOR WOMEN

"Women are insisting, quite rightly, that they be given attention with the same effectiveness and quality that they contribute to the country's social, economic, political, and cultural life. The government is responding with specific measures... Families participate in PROGRESA through women to ensure that the supports contribute resources that help households. To combat school dropout rates of girls, which are generally higher than boys' dropout rates, girls receive larger scholarships... financing has been granted to more than 20,000 projects for women's enterprises. More than 700,000 campesino families have received support for home-based businesses operated by women."

ENVIRONMENT

"More and more Mexicans, especially young people, are actively demanding that we work to restore harmony in our relationship with nature. This task is too great to be left solely to the commitment of individuals or volunteer groups... During this administration, 37 million hectares of forests, rain forests and areas of biological diversity - almost one-fifth of our nation's territory - have been included in protection and management activities. We have planted one billion trees, more than ten for every Mexican citizen... As more people, who are often very poor, share the areas and resources that we must protect, we must combine conservation and justice with sustainable development."

EMPLOYMENT

"This administration has worked to ensure the existence of the general and specific conditions that will foster the creation of new and better sources of employment... In August 1995, the open unemployment rate rose to 7.6% of the economically active population, the highest rate since this statistic began to be recorded in 1987... This month marks four years of virtually uninterrupted growth in the rate of employment. As a result, the open unemployment rate last July was just 2.26%. This is the lowest rate since December 1992."

HIGHWAYS

"In our vast and rugged territory, there is a fundamental demand for communications to foster progress and opportunities. Production and supply, access to public services, and even emergency response all improve when roads are available. In the five years of this administration, a total of 6,000 kilometers of highways have been built or expanded. In addition to the 1,600 kilometers of new rural roads that have been constructed, every year campesinos work to preserve and maintain 62,000 kilometers of roads that they themselves travel."

PUBLIC SAFETY

"We are spending more than ever before in our history on public security and justice. This year the federal and state governments will be investing 9 billion pesos in public security. In real terms, this sum is more than double the amount invested last year, and almost three times the figure for 1997."

ECONOMIC POLICY

"To further the well-being, security and prosperity of the Mexican people, we need a growing, strong and healthy national economy."

"At the very outset of this administration, a grave crisis arose that caused major harm to our people, a crisis which would have been much worse and would have lasted much longer if the government had acted irresponsibly. Thanks to the fact that we made responsible decisions... Mexico began to make headway in overcoming the crisis within a period that many people considered surprisingly brief. After the 1995 collapse, the economy grew at the very laudable rates of 5.1% and 6.8% in 1996 and 1997, respectively."

"In 1998, the Mexican economy passed another difficult test, this time caused by severe shocks originating abroad. The world price for oil plummeted, which caused the loss of a major portion of the resources available for government spending and, in addition, abrupt fluctuations wreaked havoc in world financial markets and caused serious problems for our economy... Although we could not avoid some negative effects - inflation was higher and economic growth was somewhat lower than originally forecast - on the whole, the outcome for 1998 was positive, given the difficult circumstances we had to confront. Notably, for the third consecutive year, the Gross Domestic Product (GDP) showed favorable growth, this time of 4.8%."

YEAR 2000 ECONOMY

"A year ago... I proposed a strategy for continuing to create jobs, achieving a 3% growth rate in GDP, and reducing annual inflation to 13%. Today I can affirm, on the basis of information available for the year to date, that we will achieve the goals set for 1999. Now we must step up our efforts in order to meet the goals set for next year. In the year 2000, we can and must continue to open up new sources of employment. To achieve this, GDP growth should be on the order of 5%, and to provide the most protection possible for the value of wages, inflation should not exceed 10%."

"Almost a year ago, I told the Congress that the goal for the year 2000 should be a fiscal deficit equivalent to 1% of GDP, a standard that I continue to recommend. Similarly, foreign exchange policy will continue to maintain the free float of the peso, which has proved extremely useful in providing the maximum protection possible for the country's economy against adverse events in the world economy and speculative movements of capital... We will finish implementing the strategy, which is already well under way, of using international capital markets to prevent an accumulation of maturities on foreign public indebtedness from occurring right at the beginning of the next Presidential term of office, as unfortunately happened in 1995... We will make the economic traumas of past changes of administration a thing of the past."

YEAR 2000 ELECTIONS

"The organizations that have authority in electoral matters are completely autonomous. The executive branch no longer has any involvement in the Federal Electoral Institute or the Federal Electoral Tribunal. Today, the law establishes clear-cut rules for party and candidate financing and spending, as well as their access to the electronic communications media... Election results in the year 2000 will be determined solely by the will of the people."

Mirrored with permission from Lloyd S.A. de C.V.
See their Page on Mexico Connect.

© 1999 Operadora de Fondos Lloyd, S.A.
© 1999 Allen W. Lloyd, S.A. de C.V.

Published or Updated on: July 20, 2006
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